RevPAR determinants of individual hotels: Evidences from Milan

Abstract

Purpose

This paper aims to identify revenue per available room (RevPAR) determinants of individual firms located in a destination. Independent variables are to be sought along “what” and “where” dimensions.

Design/methodology/approach

The sample is composed of 72 individual firms, operating in the 3‐5 star range and data have been collected from financial statements and questionnaires.

Findings

The empirical findings identify four main significant determinants linked to the “what” positioning – number of rooms, number of employees, number of years since the last refurbishment, market orientation – and confirm the relevance of location (“where”), and especially of centrality within the destination.

Research limitations/implications

At a theoretical level, the findings suggest the importance of linking the identification of determinants with the local context (destination) and positioning inside the city (location). At an empirical level, the study suggests some interesting implications both for existing hotels and for start‐ups. For existing firms, empirical findings show the relevance of a strong advantage (disadvantage) in location (where) that might compensate for a disadvantage (advantage) in the strategic positioning (what). Concerning start‐ups, the findings confirm the old rules of the hotel game, significantly summarized in the three success factors of a hotel unit: location, location, and location.

Originality/value

The present paper suggests the usefulness of taking into greater account the link between destination and local firms as an important determinant of performance, and explores the key success factors for individual (not affiliated) firms.

Citation

Sainaghi, R. (2011), "RevPAR determinants of individual hotels: Evidences from Milan", International Journal of Contemporary Hospitality Management, Vol. 23 No. 3, pp. 297-311. https://doi.org/10.1108/09596111111122497